There are a lot of ways through which you can save income tax in India under the Income Tax Act 1961. In this article, we will try to cover all the major ways to save income tax in India:
1. Use up your Rs 1.5 lakh limit under Section 80C
You can choose any of the following deduction or investment subject to 1.5 Lakh INR limit to save income tax in India.
Tax-Saver fixed deposits
- PPF (Public Provident Fund)
- NSC (National Saving Certificate)
- Life Insurance Premiums
- National Pension System (NPS)
- Payment of home loan
- Payment of tuition fees
- Senior Citizens Savings Scheme
- Sukanya Samriddhi Yojana
2) Contribute to the National Pension System
As per Section 80CCD(1B) of the Income Tax Act you can only contribute only 50,000 INR to the National Pension System. You can plan your retirement through NPS by contributing to debt pension funds and equity. However, the total amount can be withdrawn at the age of 60 only.
3) Health Insurance Premiums
As per section 80D, you can avail a deduction of up to 25,000 INR and senior citizens can avail the deduction of 50,000 INR. Any person who is paying the health insurance premium for senior citizens and he can take a combined deduction of 75,000 INR annually.
4) Deduction on rent paid
You can claim a deduction of around 60,000 INR under section 80GG of the Income-tax act. In case if the company provides House Rent Allowance (HRA), you can take a deduction of it subject to certain conditions.
5) Interest on home loan
Under Section 24, you can avail deduction of 2 Lakhs INR on the interest paid on home loan. In case if you have given the house on rent there is no upper limit.
6) Money in a savings account
As per section 80TTA of the Income Tax Act, you can claim deduction of 10,000 INR Annually. However, under section 80TTB, the senior citizen can avail 50,000 INR deduction on both fixed deposits and savings accounts.
7) Charity Contribution
You can claim a tax deduction on every charity donation and there is no upper cap. However, the amount of deduction available is subject to certain rules and conditions. For instance, you can avail 50% tax deductions for most of the NGO donations.